20 T H E CUBA R E V I E W 



the number of positions to be filled. Numbers of foreigners have returned to their 

 native countries, because of the economic situation and the inability to obtain continued 

 employment at living wages in Cuba. At this time there is no inducement for anyone 

 to come to Cuba seeking work or, in general, to engage in business. When conditions 

 reach normal, there should be openings for men with sufficient capital who make a 

 careful study of conditions before investing. 



Banking Situation 



The Cuban banking institutions were severely affected by the paralyzations of the 

 sugar industry in 1Q20. The banks had all made heavy loans which amounted to 

 immense sums and had accepted as security stocks of sugar, sugar properties, real 

 estate, and merchandise. These loans were effected when market values of property 

 and goods were extremely high, and the amounts loaned were in general greatly in 

 excess of conservative values of the securities accepted. This was especially true 

 of loans made on sugar stocks and allied properties. 



Therefore, when the "crash" came the banks found themselves with large numbers 

 of notes secured by collateral which had shrunk to a fraction of its face value and 

 on which nothing could be realized except by accepting a great loss. The sugar estates, 

 mills, and other real estate were practically unsalable at the time, and the majority 

 of these required heavy expenditures to keep them in operation. 



As a result the Cuban banks, with but few exceptions dependent on their Cuban 

 business and the economic condition of the country had to close their doors. The 

 foreign banks were more fortunate. Having heavy resources outside of Cuba and 

 therefore not being so dependent on Cuban industries, they were able to weather the 

 storm, and to arrange to carry the great amount of property which they were obliged 

 to take over, or assume control of, until Cuba recovers sufficiently for them to realize 

 on such properties without too great a loss. One of these foreign banks decided to 

 leave the Cuban field, and closed its business, paying all liabilities and accepting the 

 losses involved. Another banking institution, the Trust Co. of Cuba, controlled by 

 foreign capital, ceased its general banking operations early in 1922, but continued in 

 business along other lines. 



Banking Legislation to Protect Public Interests 



On October 9, 1920, the Banco Internacional de Cuba, one of the most important 

 Cuban banks, closed its doors, but reopened on the 11th of the same month taking 

 advantage of the terms of the moratorium decreed by the President of Cuba on 

 October 10, 1920. The moratorium was aimed to protect general interests in Cuba 

 against a panic caused by the financial situation, and to allow time for the framing 

 of suitable laws to meet the crisis. The moratorium was renewed twice, finally ceasing 

 in effect on February 1, 1921. Under its terms payments amounting to 10 per cent 

 of liabilities had to be made, but debtors were not limited to paying that proportion, 

 and it did not affect transactions or deposits subsequent to October 10, 1920. 



A law, commonly known as the Torriente law, was enacted during January, 1921, 

 providing for a suspension of action until after June 10, 1921, on all claims in connection 

 with bank deposits and commercial transactions occurring prior to October 10, 1920, 

 provided certain specified payments were made. Payments provided by this law in 

 the case of ordinary commercial debts, were 15 per cent (including the 10 per cent 

 required by the terms of the moratorium) before January 31, 1921; 25 per cent before 

 February 28, 1921; 25 per cent before March 31, 1921; and 35 per cent before April 

 30, 1921. For bank deposits, the payments required were 15 per cent (including the 

 10 per cent provided for by the moratorium) before February 10, 1921; 15 per cent 

 before March 10; 20 per cent before April 10; 25 per cent before May 10; and 25 

 per cent before June 10, 1921. The banks generally attempted to carry out the terms 

 of this law and continue in business, and the most important of the Cuban banking 



